Engineering news
Manufacturers are seeing the toughest trading conditions in almost three years, according to a survey by the manufacturers' organisation EEF.
The survey indicates that slower demand both at home and overseas is hitting order books, with manufacturers' responses on UK orders turning negative for the first time in two and a half years.
Output and order balances in the third quarter of 2012 came in lower than expected by companies. A balance of just 4% of manufacturers reported output had increased, down from 20% in the last quarter and at its lowest level since the end of 2009.
In terms of orders, a balance of 3% reported an increase, down from 17% previously and the weakest since the start of 2010.
Further analysis of the results has suggested that the drop in export orders is not limited to sluggish demand in crisis-hit eurozone economies, said the EEF.
There remains differences in fortunes across sectors. Manufacturers of motor vehicles and mechanical equipment continued to report healthy positive output balances. At the other end of the spectrum were metal and metal product manufacturers.
Across the sector plans for investment remained unchanged since the last quarter and recruitment trends were still positive.
Lee Hopley, chief economist at the EEF, said: “The weaker global outlook precipitated by the on-going economic challenges in Europe has clearly hit home in our latest survey. Pockets of growth still remain in some sectors, but overall confidence appears to be draining away.”
She added: “The sharp drop in export balances over the past quarter is a particular concern given their importance to UK manufacturers and also our economy’s reliance on exports as a source of growth.”
“It’s encouraging to see that companies are not planning for a further deterioration in conditions as we head into the final months of the year. But, the risks of a more prolonged period of weak growth in global markets, which would continue to make economic rebalancing an uphill struggle, can’t be ruled out.”